Report: Unemployment benefits saved jobs, boosted growth

Providing unemployment benefits to the long-term jobless has preserved nearly 2 million jobs and injected billions to help the nation's economy expand. 

About 1.7 million jobs have been saved or created since the recession began in late 2007 that "would not have been there absent this spending," a new report released Thursday from the Economic Policy Institute found. 

"Unemployment benefits give unemployed workers needed financial support to cope after the loss of a job, and they are also one of the most effective mechanisms for injecting spending into the economy", the report said. 

The Senate is poised to pass an extension of unemployment benefits, which lapsed June 2, early next week. Since early last month, nearly 2.5 million long-term jobless Americans have lost benefits beyond the 26 weeks offered by states.

States with high levels of unemployment are offering as much as 99 weeks of benefits. 

The provisions included in the $862 billion economic stimulus — extended unemployment benefits combined with COBRA health insurance subsidies that significantly cut costs for the jobless and the extra $25 a week, supported 1.2 million full-time equivalent jobs that the report says.

The report concludes jobs were generated by a $152.1 billion increase in spending for unemployment compensation boosting gross domestic product by $244.8 billion, or 1.7 percent. 

The COBRA subsidies and the $25 extra in weekly checks supported 302,000 jobs early in the year, the EPI report said. 

The effects of the GDP increase created the boost for employment and for increased hours worked by those who already have jobs. 

"Both of these increases are good news, because they mean either new jobs, or more hours (and hence higher paychecks) for those with jobs," the report said.

Looking at the impact on the job count alone, payroll employment was 1.15 million higher as a result of the expanded unemployment compensation system, helping to offset the more than 8.0 million payroll jobs that had been lost in the downturn through the first quarter of 2010.